High-level Expert group on reforming the structure of the EU banking sector presents its report

The Commission has today received the report prepared by the High-level Expert Group on reforming the structure of the EU banking sector (MEMO/12/129). The Group chaired by Erkki Liikanen presented the main findings to Michel Barnier, Commissioner for internal market and services.

Governor Erkki Liikanen said "The report contains the Group's recommendations for further reforms of the banking sector, including structural reform. Building on the substantial measures already under way, I believe that the Group's recommendations would if implemented provide for a safer, more stable and efficient banking system serving the needs of citizens, the EU economy and the internal market."

Internal Market and Services Commissioner Michel Barnier said "I would like to extend my thanks to Erkki Liikanen and the members of the group. This is an important report that will inform our policy on regulating the financial sector. The report underlines the excessive risks taken by banks in the past, and makes important recommendations to make sure that banks work in the interest of their customers". He continued: "This report will feed our reflections on the need for further action. I will now consider the next steps, in which the Commission will look at the impact of these recommendations both on growth and on the safety and integrity of financial services. We need to look at these questions also in light of the financial reforms that I have already put on the table of the European Parliament and the Council".

In brief, the Group recommends actions in the five following areas:

Mandatory separation of proprietary trading and other high-risk trading activities,

Possible additional separation of activities conditional on the recovery and resolution plan,

Possible amendments to the use of bail-in instruments as a resolution tool,

A review of capital requirements on trading assets and real estate related loans, and

A strengthening of the governance and control of banks.

For further information, an executive summary of the report is also available (see link hereafter).

Background

Commissioner Michel Barnier announced his decision to set up the Group in November 2011. He then appointed Erkki Liikanen, Governor of the Bank of Finland and a former member of the European Commission, as Chairman. The members were appointed in February 2012. They were chosen on the basis of their technical expertise and professional background, and were appointed in a personal capacity.

The Group held monthly meetings, inviting different stakeholders, and organised a public consultation in May.

Its mandate was to determine whether, in addition to ongoing regulatory reforms, structural reforms of EU banks would strengthen financial stability and improve efficiency and consumer protection, and if that is the case to make recommendations as appropriate.